Over 4.3 billion yuan! Xingyuan material gets the big purchase order of LG new energy lithium battery diaphragm.

After trading on August 31st, Xingyuan material (300568) announced that the company intends to sign a "supply assurance agreement" with LG New Energy, stipulating that the company will supply LG new energy with wet coating of lithium-ion battery separator material, with an agreement amount of about 4.311 billion yuan. It shall be valid for 4.5 years from the date of entry into force of the agreement and may be extended with the consent of both parties.

According to public data, LG New Energy is a new company established after LG's chemical spin-off of the automotive battery business, which is mainly engaged in the import, development, manufacture and trading of battery units and battery packs.

Xingyuan material said that the signing of the "supply Assurance Agreement" will further highlight the company's dominant position in the field of lithium-ion battery diaphragm and play a positive role in the further promotion of the company's diaphragm products in domestic and foreign markets; at the same time, it will also further promote both sides to give full play to their respective advantages and create greater commercial value for bilateral cooperation.

The research report released by Chuang Chuang Securities shows that Xingyuan material broke through the diaphragm of LG power battery and began to sell significantly in the third quarter. Benefiting from this, the company's overseas shipments and coating share will pick up significantly in the second half of the year, and the company's overseas share is expected to rise to 50% for the whole year, and the coating ratio is expected to reach more than 40%. The increase in the proportion of coating and overseas shipments is expected to further enhance the company's profitability.

In addition to LG Chemistry, Xingyuan signed a strategic cooperation agreement with Northvolt in March this year to establish a lithium-ion battery separator factory in Europe, starting from 2023 to provide lithium-ion battery separators to Northvolt to open up the European market. By 2024, the company's European plant will supply Northvolt with more than 50% battery separators, including base membrane, coated diaphragm and slitting.

In addition, according to the 2021 semi-annual report released by Xingyuan material, the company's operating income in the first half of the year reached 831 million yuan, an increase of 143.65% over the same period last year; the net profit belonging to shareholders of listed companies was 112 million yuan, an increase of 56.39% over the same period last year.

According to the semi-annual report, in the first half of the year, Xingyuan material's business income mainly came from the sales of lithium-ion battery diaphragm products, and the company sold more than 500 million square meters of lithium-ion battery diaphragm products, further increasing its cooperation with foreign lithium-ion battery manufacturers such as South Korea's LG Chemical, Samsung SDI, Japan's Murata, and SAFT. And to Ningde Times, BYD, Hefei Guoxuan, AVIC Lithium, Yiwei Lithium Energy, Tianjin Lishen, Xin Wanda and other mainstream lithium-ion battery manufacturers bulk supply of lithium-ion battery separators, the company continues to improve the dry-wet diaphragm, coated diaphragm production capacity, production, continue to expand the company's market share.

Southwest Securities previously released a research report saying that Xingyuan material has three major production bases in Shenzhen, Hefei and Jiangsu, while the company expanded production at the level of 10 billion in Nantong, building a total of 3 billion square meters of wet diaphragm and coating diaphragm production capacity in three phases. after completion, the overall production capacity of the company will exceed 6 billion square meters. Through large-scale production expansion, the company is expected to achieve economies of scale, continue to improve profitability and thicken profits.

Chuang Chuang Securities also expects profitability to continue to improve in the next 2-3 years, benefiting from the increase in wet volume and overseas share. Xingyuan material has an existing production capacity of 1.5 billion square meters, with a domestic production capacity of 800 million square meters in 2022, 700 million square meters in Sweden in 2023, and an effective production capacity of 1.1 billion square meters / 1.5 billion square meters in 2022 / 2023, with a steady increase in production capacity to protect customer demand.